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(1967) 1 SCR 489 : AIR 1967 SC 465
In the Supreme Court of India
(BEFORE K.N. WANCHOO, J.M. SHELAT AND G.K. MITTER, JJ.)
RAGHUBANS NARAIN SINGH … Appellant;
Versus
UTTAR PRADESH GOVERNMENT THROUGH COLLECTOR OF BIJNOR
… Respondent.
Civil Appeal No. 82 of 1964* , decided on September 23, 1966
Advocates who appeared in this case :
B.C. Misra, Senior Advocate (M.V. Goswami, Advocate, with him), for the Appellant;
N.D. Karkhanis, Senior Advocate (O.P. Rana, Advocate, with him), for the
Respondent.
The Judgment of the Court was delivered by
J.M. SHELAT, J.— This appeal by certificate from the High Court at Allahabad
involves the question as to the valuation of a piece of land belonging to the appellant
situate outside the town Nehtaur, in District Bijnor, U.P. The land admeasures 6 pucca
bighas and is grove land having in all 123 trees of which a number are mango and
naspati trees.
2. The notification under Section 4 of the Land Acquisition Act, 1 of 1894 was
issued on December 22, 1945 in which it was stated that the land was being acquired
for a public purpose viz. the construction of a hostel etc. of S.N.S.M. High School at
Nehtaur. Possession of the land was taken from the appellant on July 4, 1947. The
Collector of Bijnor made his award under Section 11 of the Act fixing Rs 1167-4-0 as
compensation for the trees, Rs 1050-12-0 as compensation for the land and adding
15% solatium awarded the total sum of Rs 2218. A reference was thereafter made
under Section 18 at the instance of the appellant to the District Judge, Bijnor. Both
the appellant and the Government led oral evidence and also adduced evidence of
certain specimen of exemplar sales. Besides the oral evidence, the appellant relied on
two sale deeds, one dated March 20, 1926 and another dated January 5, 1934. He also
led the evidence of one Syed Nisar Haider Zaidi, a Deputy Collector who had just
retired and who prior to his retirement had written two letters to the appellant dated
October 14, 1945 and November 20, 1945 expressing his desire to purchase the land
in question with a view to build a residential house for himself so that he could live
therein after his retirement. In these letters he had offered Rs 18,000 but that offer
was not accepted by the appellant as he wanted Rs 24,000 as the price of the land. On
behalf of the Government also reliance was placed on three specimen sales being
Exhibits A-1, A-2 and A-3. The evidence disclosed that the land acquired was at a
distance of about 2 furlongs from the town Nehtaur which at that time had a
population of about 18,000 souls. The land abuts on the main road from Moradabad to
Bijnor and is next to the said school. Nearby is a fairly large size pond. The evidence of
Murari Singh, one of the witnesses examined by the Government, was that besides the
appellant's grove there were some other groves nearby on the other side of the road,
that the town was a growing town in the sense that electricity was available, there was
a branch of Bharat Bank and there were 5 or 6 mills and a crusher working in the town
since the last few years. The mills referred to by the witness obviously must be some
small scale industries. The witness however stated that only 2 or 4 new houses had
been constructed in the town during the last about 10 years though one more school
had been opened in the town about 3 years ago. As against his evidence there was
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some evidence that some houses were constructed in the grove lands nearby. But
there was no evidence to show that there was any building activity nearby of any
substantial nature or that there was any definite trend of development in the direction
of the acquired land. As regards the income from the land there was the evidence of
Pushkar Nath that the fruit trees grown in the land yielded approximately an annual
income of Rs 500, about 49 mango and naspati trees being fruitbearing at that time.
It appears that the grove had been laid only about two or three years ago. But the
evidence of the Village Patwari clearly disclosed that the grove would yield about Rs
1000 a year when all the trees started bearing fruits. Besides the income from the
trees the land also yielded an income of about Rs 200 a year by way of sale of Bind
pullas.
3. The District Judge discarded the evidence of specimen sales produced by both
the sides as being of no assistance for the reasons stated by him. It is not necessary
to examine those reasons as there is no dispute that he was right in rejecting them
and the High Court also agreed with him that that evidence was of no help in arriving
at the correct valuation. The District Judge, however, was impressed with the evidence
of witness Zaidi and accepting the offer conveyed by him as genuine and bona fide
held on the basis of that offer that the value of the land could be safely assessed at Rs
18,000; and adding to that sum the solatium at 15% he awarded Rs 20,700 as
compensation. He also held that the appellant was entitled to interest under Section
28 but allowed interest at 3% per annum observing that since the acquisition was for
an educational institution, interest at that rate was proper.
4. Against the said judgment and order the Government filed an appeal before the
High Court at Allahabad and the appellant also filed his cross objections. As already
stated the High Court agreed with the District Judge that the evidence of specimen
sales was of no assistance. But regarding the evidence of witness Zaidi it commented
as follows:
“It is not possible for us to say as to whether the approach made by Syed Nisar
Haider Zaidi was a genuine one or not; but even if we take it to have been a
genuine approach there can be no doubt that the price that he was going to offer
was a price which he fixed because of the peculiar circumstances in which he was
placed, the circumstances having been that he was, upon retirement, desirous of
going back to his native place and to take up residence there and to build a house
outside the populated area. The price which such an exceptional purchaser is going
to offer will not afford a true test about the value of the property.”
Having thus rejected the evidence of the specimen sales and also the offer of evidence
of witness Zaidi the High Court fell back on the net annual income from the land which
it estimated at Rs 650 and multiplying it by 20 fixed the value of land at Rs 13,000.
Adding to that figure the solatium at 15%, the High Court awarded in all Rs 15,000.
As regards interest the High Court rejected the appellant's contention that he was
entitled to interest at the rate of 6% per annum on two grounds: (1) that the question
as to the rate of interest was not specifically raised in his cross-objections, and (2)
that Section 28 was discretionary and therefore the District Judge could fix the rate of
interest up to 6% per annum and that it was not incumbent upon the Court to award
interest at 6% per annum as contended by the appellant. The appellant has
challenged in this appeal the correctness of the judgment and the order of the High
Court both on the question of valuation and the rate of interest.
5. The first contention raised on behalf of the appellant is that the High Court's
judgment suffered from an infirmity in that it failed to take into account the potential
value of the land as a building site in view of the evidence as to the town's recent
development. This contention, in our view, has no substance. Market value on the
basis of which compensation is payable under Section 23 of the Act means the price
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that a willing purchaser would pay to a willing seller for a property having due regard
to its existing condition, with all its existing advantages, and its potential possibilities
when laid out in its most advantageous manner, excluding any advantage due to the
carrying out of the scheme for the purposes for which the property is compulsorily
acquired. As observed in South Eastern Rail Co. v. L.C.C.1 .
“The value to be ascertained is the price to be paid for the land with all its
potentialities, and with all the use made of it by the vendor.”
Dealing with the doctrine of potential value this Court in N.B. Jeejabhoy v. District
Collector, Thana2 observed as follows:
“A vendor willing to sell his land at the market value will take into consideration
a particular potentiality or special adaptability of the land in fixing the price. It is
not the fancy or the obsession of the vendor that enters the market value but the
objective factor, namely, whether the said potentiality can be turned to account
within a reasonably near future …. The question therefore turns upon the facts of
each case. In the context of building potentiality many questions will have to be
asked and answered: whether there is pressure on the land for building activity,
whether the acquired land is suitable for building purposes, whether the extension
of the said activity is towards the land acquired, what is the pace of the progress
and how far the said activity has extended and within what time, whether buildings
have been put up on lands purchased for building purposes, what is the distance
between the built-in-land and the land acquired and similar other questions will
have to be answered. It is the overall picture drawn on the said relevant
circumstances that affords the solution.”
It is clear that there is no evidence on record of any building activity of a substantial
nature being carried on in the neighbourhood of the acquired land at about the time
when the notification was issued in 1945. There is equally no evidence of any trend of
development of the town in the direction of the acquired land. The only evidence was
as to the existence of the school nearby, of the land abusing on the road and of some
houses having been built on the opposite side of the road in some of the grove lands.
Such evidence however would not constitute an ascertainable trend of development of
the town in the direction of the acquired land or of any active building activity nearby.
Clearly, therefore, no question of the valuation having to be made on the basis of the
potentiality of the land as building site can possibly arise. The contention of Mr Mishra
in this regard therefore must be rejected.
6. But the next contention urged by him is a substantial one and requires
consideration. He argued that the High Court fell into error in rejecting the evidence of
witness Zaidi accepted as reliable by the District Judge and in substituting that finding
by its own estimate of the annual income derived from the land. The evidence of
witness Zaidi being the evidence of an offer made by him cannot of course be equated
in importance with the evidence of proper specimen sales of properties in the
neighbourhood. Obviously an offer does not come within the category of sales and
purchases but nonetheless if a person who had made an offer himself gives evidence
such evidence is relevant in that it is evidence that in his opinion the land was of a
certain value. But the evidence that the owner refused an offer so made amounts to
this only that in his opinion his land was worth more than the figure of value named or
that the offer was for some other reason such that he was not willing to accept, (cf
Government of Bombay v. Merwanji Muncherji)3 . It has also been held that an
agreement to sell is a relevant matter and can be used in relation to fixing the value of
the acquired land. (of Governor-General-in-Council v. Ghiasuddin)4 . There can however
be no doubt that apart from Zaidi's offer being relevant it was not an offer similar to
an offer made by an irresponsible broker as commented in Government of Bombay v.
Merwanji Muncherji3 . There is nothing also to show that he or the appellant knew that
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a notification for acquisition was about to be issued or that he colluded with the
appellant to fabricate evidence of an offer to enable the appellant to get better
compensation. There is not even a faint suggestion in the cross-examination on behalf
of the Government that his offer was not genuine or that it was irresponsible. What is
more significant is that no suggestion was made in his cross-examination that the
offer was excessive or that it was not bona fide or that he had made it without
properly considering it or without regard to the situation and the suitability of the
land. There was therefore no justification in the remark made by the High Court that it
could not be said whether his offer was genuine or not. The District Judge accepted it
as genuine and if the High Court did not agree with his assessment of his evidence it
ought to have given reasons for such disagreement. It is impossible thus to treat the
evidence of Zaidi either as unacceptable or irrelevant. The second criticism by the High
Court of Zaidi's evidence that his offer was made in exceptional circumstances and
therefore cannot be regarded as one of a willing prospective purchaser is also not
correct. At the time when Zaidi made his offer he was about to retire. He wanted to
retire in his native place and desired to have a house which would be situate outside
the town. His offer was for a grove land with plenty of trees some which were already
bearing fruits and the rest were likely to yield fruit in the near future. The land abutted
on the road, was next to the school and some houses had already been built on the
other side of the road. In these circumstances it is difficult to appreciate why the High
Court thought that the offer was not of a willing prospective buyer. There were other
groves nearby and Zaidi had therefore an opportunity to select, if he wanted to, there
being nothing to show that the owners of the other such land were not willing to sell.
Probably he selected this land because it was situated next to the school and abutted
on the road. In view of these facts it is difficult to see how the High Court came to the
conclusion that he made the said offer in special circumstances, agreeing to purchase
the land under compulsion or stress of circumstances. Since his evidence was not
challenged either on the ground that his offer was not bona fide or that he offered to
buy under compulsion or under any special circumstances there was no valid reason
why the High Court should have refused to accept the appreciation of his evidence by
the District Judge and resort to a method of valuation not always adequate viz. the
annual crop value. Such a method of valuation is not adequate at least for two
reasons: (1) that the owner may not have so far put his property to its best use or in
the most lucrative manner, and (2) in a case like the present the grove had not yet
started giving the maximum yield. Such a method of valuation by ascertaining the
annual value of the produce can and should be resorted to only when no other
alternative method is available. We are of the view that the District Judge was right in
accepting the evidence of Zaidi and in treating his offer as one of a willing prospective
purchaser. The valuation made by the District Judge on that evidence rested on a
better footing in the circumstances of the case and ought to have been accepted by
the High Court.
7. On the question of interest, Mr Mishra contended that under Section 28 neither
the District Judge nor the High Court had any discretion in allowing interest at a rate
less than 6%. He argued that this question being purely one of construction and not
depending on any finding of fact even though the question was not specifically raised
in the appellant's cross-objections before the High Court the High Court ought to have
allowed interest at 6%. Mr Karkhanis, on the other hand, argued that what Section 28
does is to provide for a ceiling of the rate of interest. And even if that is not so, since
the section confers discretion on the court to grant or not to grant interest that
discretion impliedly means that even where the court grants interest it can do so at
any rate up to 6%. The contention so put forward resolves itself into two questions:
(1) whether in the absence of a specific objection as to interest in the appellant's cross
-objections the High Court ought to have gone into that question, and (2) whether on
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a proper interpretation of Section 28 the Court has a discretion to grant interest at a
rate less than 6%. The first point would not create any difficulty in the way of the
appellant because the High Court did in fact go into the question of interest even
though it was not specifically taken in the cross-objections and decided the question
on interpretation of Section 28. Besides, the question is purely one of law and as Lord
Watson said in Connecticut Fire Insurance Co. v. Kavanagh5 .
“When a question of law is raised for the first time in a court of last resort upon
the construction of a document or upon facts either admitted or proved beyond
controversy, it is not only competent but expedient in the interests of justice to
entertain the plea.”
Section 28 reads as follows—
“If the sum which, in the opinion of the court, the Collector ought to have
awarded as compensation is in excess of the sun which the Collector did award as
compensation, the award of the court may direct that the Collector shall pay
interest on such excess at the rate of six per centum per annum etc.”
In its plain language the discretion that is conferred on the court is whether in the
given circumstances of a particular case the court should award interest or not. The
words “may direct” mean that it is discretionary on the part of the court to grant or
refuse to grant interest. But the words following those words viz. “the Collector shall
pay interest on such excess at the rate of six per centum per annum” would mean that
once the discretion to grant interest is exercised there is no further discretion and the
interest if awarded has to be at the rate of six percentum per annum. This also
appears to be the construction of Section 28 so far understood. It is because the
section leaves no discretion as regards the rate of interest that the Central Provinces
Act 17 of 1939 by Section 2 provides that the rate of interest shall be at a rate which
shall be not less than 3% per annum and not more than 6% per annum in place of the
words “at the rate of six per centum per annum” in Section 28. Some of the other
State Legislatures such as Madras, Gujarat, Maharashtra and Punjab have instead of
using the abovementioned phraseology substituted 6% in Section 28 by “4% per
annum”. The result of these amendments is that whereas in the case of the Central
Provinces (now Madhya Pradesh) the court has a discretion to grant interest at
anything between three to six percent, in the case of the other States the court has to
award interest at the rate of 4%. We are told that no such amendment has been
carried out in U.P. The consequence is that Section 28 as it stands must apply and
therefore where the court exercises its discretion and grants interest the interest has
to be at the rate of 6%. The construction which we are inclined to place on Section 28
is to a certain extent supported by the same expression used in Section 34 which also
deals with interest and which provides that when the amount of compensation is
neither paid nor deposited before taking possession of the acquired land “the Collector
shall pay the amount awarded with interest thereon at the rate of six per centum per
annum” etc. It is a well settled rule of construction that where the legislature uses the
same expression in the same statute at two places or more than the same
interpretation should be given to that expression unless the context requires
otherwise. That being so, there is nothing wrong in permitting the appellant to raise
the point as to the rate of interest as that question depends only upon the
construction of Section 28. In the view that we have taken as to the interpretation of
Section 28 Mr Mishra must also succeed on this question.
8. In the result, the appeal must be allowed and the judgment and order passed by
the High Court set aside. The judgment and order of the District Judge by which he
fixed the compensation at Rs 20,700 including solatium at the rate of 15% is restored.
But we direct that the interest on the excess amount of Rs 18,482 should be paid to
the appellant at the rate of six per cent per annum from July 4, 1947 up to the time of
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payment. The respondent will pay to the appellant his costs throughout.
———
*Appeal from the Judgment and Decree dated 13th March, 1959 of the Allahabad High Court in first Appeal No.
74 of 1949.
1 (1915) 2 Ch 252
2 CA Nos. 313 to 315 of 63 decided on Aug 30, 1965
3 10 Bom LR 907
4 30 PLR 212
5
(1892) AC 473
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